Court overturns Vermont law on commerical use of doctor info

The U.S. Court of Appeals for the Second Circuit has determined that a Vermont law restricting the commercial use of information relating to physician prescribing patterns is unconstitutional. The decision favors IMS Health, SDI and Source Healthcare Analytics, three health information companies that filed a lawsuit seeking to prevent Vermont from enforcing the law.

"The district court found that the Vermont statute is a constitutionally permissible commercial speech restriction under the test set forth in Central Hudson Gas & Electric Corp. v. Public Service Commission of New York, 447 U.S. 557, 561-66 (1980), and that the statute does not violate the dormant Commerce Clause. Because we find that section 17 is an impermissible restriction on commercial speech under Central Hudson, we reverse and remand," the court says in its ruling. The decision is a result of an appeal from the U.S. District Court for the District of Vermont.

The court wasn't unanimous in its decision, however. "Misconstruing Vermont's prescription confidentiality law...as a direct restriction on pharmaceutical marketing, which is indisputably a form of 'commercial speech' for purposes of the First Amendment, the majority extends First Amendment protection to data miners and pharmaceutical companies principally challenging a restriction on access to otherwise private information. In so doing, the majority not only reaches the wrong result in this case, but creates Circuit precedent likely to have pernicious broader effects in a complex and evolving area of First Amendment law," Judge Debra Ann Livingston says in her dissent.

Vermont passed the law to limit drug companies' marketing campaigns as part of a push to reduce healthcare costs, as Bloomberg notes. The law banned the use of prescriber data for marketing efforts unless doctors consented.

"We're disappointed with the outcome of the appeal and are considering our options," state Assistant Attorney General Bridget Asay said in a telephone interview, according to Bloomberg.

More than 100 similar bills have been introduced in state legislatures nationwide, but only three have been passed into law--and none since 2007 when Vermont and Maine joined New Hampshire as the only three states to do so.

To read the full Second Circuit Court of Appeals decision, click here: IMS Health v. Sorrell.

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